On Monday we welcomed another young care leaver into a comfortable safe home after a very tight turn round refurb on a very tight budget.
Think I need a kip!
Rent increases can be an awkward conversation for both tenants and landlords. Never more so than right now. With the cost of living increasing by 7% in the UK, we are all feeling the pinch.
It is so easy for landlords to be painted as the greedy bad guys, and for them to be used in the narrative to fulfil other agendas. The fact remains, they have every right to charge a fair market rent for their rental properties and are in many instances providing much needed compliant homes for our communities. For landlords to keep their properties compliant and in a good rental condition, they need to charge an appropriate fair rent. From my experience, most landlords do not have a bottomless pit of cash to spend on the upkeep of their rentals and rely on the rents to cover their expenses. Afterall, like any business transaction, the numbers must work for any hope of sustainability.
It could also be argued that landlords cannot be held accountable for a tenant’s potential inability to pay the market rent. Is there not a much bigger issue here? One that cannot be left at the landlord’s door.
On the flip side, I really do not hold much praise for the landlords who charge high rents and invest very little back in their property to maintain it going forward and to keep it in a legally compliant condition. https://www.gov.uk/government/publications/homes-fitness-for-human-habitation-act-2018/guide-for-landlords-homes-fitness-for-human-habitation-act-2018
Landlords are faced with a forever changing economic environment, often the very same ones that tenants are facing too.
There are many reasons why a landlord will increase their rental prices:
- To match market rents – a must in my view
- To pay for property maintenance or improvements – a must in my view
- To accommodate tax increases – unavoidable
- To pay agent fees – whether paying agents fees or managing the property themselves, the cost is similar if done properly. Time/effort/knowledge etc
- To increase their profits – to cover their own cost of living expenses (may have become a single parent/ their own home may have a mortgage increase, may have lost their job etc)
Tenants and Landlords – Things to do and look out for:
Section 13 notice
Section 13 of the Housing Act 1988 is a formal notice informing tenants of a rent increase.
The landlord must issue a section 13 notice if they wish to increase the rental price of their property.
A tenant can only receive a section 13 if they have an assured tenancy or an assured shorthold tenancy.
Negotiation
If both parties are unhappy with each other’s proposed rent, it would be ideal to attempt to come to an agreement before evictions are issued and tenancies are broken down.
It would be ideal as the landlord and/ or tenant to look at similar properties in the same location and compare your new rental price to them. This will allow the landlord to consider if their new asking price is reasonable and discover the tenants’ other options if they were to disagree with the increase.
A landlord does not want to lose a good tenant, who pays their rent on time and acts in a tenant like manner.
The Tenancy
If a tenant is in within a long-term tenancy that began before January 15th, 1989, landlords can only raise the rent every two years and must apply to the Valuation Office Agency.
Rents after the above date can increase up to once a year.
However, a landlord can give a new tenancy agreement after 6 months with a new level of rent.
If the tenancy agreement sets out a procedure for increasing rent, the landlord must stick to it.
Different tenancies:
Periodic tenancy – the landlord cannot normally increase the rent more than once a year without the tenant’s agreement.
Fixed-term tenancy – the landlord can only increase the rent if the tenant agrees. If the tenant does not agree, the rent can only be increased when the fixed term ends. (Source: GOV.UK)
Help to pay rent
If the tenant is on low income or gets benefits, they may be able to get Housing Benefit or housing cost payments via Universal Credit.
If the landlord wants to keep their current tenant, they will give tenants as much advise as possible to assist with the increase.
Evictions
If a tenant is unable to prevent the rent increase and fails to reach an agreement, they must still pay the new rent level to the landlord. If the tenant does not pay the extra rent, they can fall into rent arrears. A compliant landlord can use this as a reason to evict them.
The tenant cannot challenge the increased amount if they have already paid the new price. (Source: Citizens Advice)
Permission
For any tenancy the landlord must get permission from the tenant if they want to increase the rent by more than previously agreed. The rent increase must be fair and realistic, which means in line with average local rents. (Source: GOV.UK)
Notice
The landlord must give the tenant a minimum of one month’s notice for a tenancy that is paid weekly or monthly (periodic tenancy). A 6-month notice is required for a tenancy that is paid yearly (fixed-term tenancy).
Tribunal
If a landlord does not agree to lower the rent, the tenant can appeal for free to a tribunal for rent complaints. They can ask the tribunal to decide new rental terms when the tenancy is renewed.
Conclusion
It is important for landlords to be fair and thoughtful when putting forward a new rental price for their property. Negotiating and maintaining rapport is vital as a landlord does not want to unsettle or lose a good tenant.
Useful Links:
Newly proposed EPC regulations that will change the minimum Energy Efficiency Standards will take effect in 2025.
According to new research by Direct Line business insurance, a large proportion of landlords are unaware of the planned changes to the minimum standards for Energy Performance Certificates.
All newly rented properties will need a minimum EPC rating of C from December 2025, as the government aims to increase energy efficiency and achieve net-zero carbon targets.
The current rating requirement is E or above and if a landlord was to rent a property below these standards, they could receive a fine of up to £5,000. Therefore, it is vital that you ensure you are complying with the energy performance standards of your property.
Shawbrook Bank’s ‘Confronting the EPC Challenge’ white paper revealed that 23% of landlords in their survey admitted that their properties are rated D and below. Therefore, a large proportion of landlords will need to have the energy efficiency of their property boosted to meet the newly proposed guidelines.
The regulations will be introduced for new tenancies first, followed by all tenancies from 2028.
An EPC certificate shows how energy efficient a home is and it is valid for 10 years.
It can cost between £35 and £120 depending on the size of the property it is for. (Source: EDF Energy)
Although the stated 2025 regulations are only proposed, it is still a necessity to improve your EPC rating, not only to abide by the law, but to make your property as energy efficient as possible.
I’ve put together a variety of actions you can take to bump up the energy performance in your property.
How to improve your EPC rating:
Double glazing
- Upgrading your windows and doors will increase insulation levels.
- Can reduce noise
- Double glazing costs vary between £150 and £600 per window. (Source: Double Glazing Network)
Loft insulation
- Installing insulation will prevent heat from rising and disappearing through the roof.
- Costs between £5 and £11 per square metre. This means that it should cost no more than about £1250 to insulate a 4-bedroom detached home. (Source: Home How)
Wall insulation
- Ensures that heat remains within the property.
- Helps with the cost of energy bills.
- The average cost of cavity wall insulation is roughly £200 per wall (Source: MyBuilder.com)
Replace boiler
- Install a new energy-efficient boiler
- For example, electric combi boilers and biomass boilers.
- The average price of an electric combi boiler is £1,500 for a 9-kW model (Source: Green Match)
Secondary heating source
- For example, replacing an open fireplace with a log-burner will give you greater fuel efficiency.
- The average cost of a log burner is £950 and £2,000 to install (Source: Checkatrade https://www.checkatrade.com/blog/cost-guides/log-burner-install-cost/)
Solar panels
- Produces cheaper and greener energy.
- A single solar panel costs £350-£500 (Source: Green Match)
LED light bulbs
- Upgrading your lighting to LED as its components and the way it generates light significantly extends its lifespan. LEDs are capable of turning 70% of their energy into light.
- LED light bulbs can cost as little as £1 and over the course of one year, the approximate cost of an LED lamp is £1.70 (Source: Green Energy)
Install a smart meter
- A smart meter gives you real time information on your energy use, allowing for better management of your usage.
- It must be noted that a smart meter will not automatically save energy and money.
Efficient appliances
- Check the energy label on your appliance. What is its energy rating?
- For example, install a fan-assisted oven and an electric hob as they are more energy-efficient than gas rings.
Overall, it can be inexpensive to improve your energy efficiency. It can be as simple as spending loose change on energy-efficient lighting. Boosting your energy efficiency will not only avoid fines, but it can also help reduce utility bills, saving the landlord money in the long run.
Useful Links:
Checkatrade: https://www.checkatrade.com/blog/cost-guides/log-burner-install-cost/
Shawbrook Bank, ‘Confronting the EPC Challenge’: https://www.shawbrook.co.uk/media/4498/epc-report-20220203.pdf?utm_source=PR&utm_medium=Press+Release&utm_campaign=EPC
This week I am going to share with you a potential trap you could fall into in your investments in Nottingham.
This trap concerns article 4 and additional licensing for a HMO.
I have found a 4-bed terrace house that could on first inspection seem an excellent HMO investment opportunity due to its price, size and potential.
Location
The property is located on Radford Boulevard, Radford, Nottingham, NG7 3BQ, which would be an ideal location for a HMO.
Cost
It is listed on Rightmove with Leaders for £170,000, an attractive price for a HMO investor.
Benefits of locality
Within 1 mile from Nottingham City Centre, where both of the city’s university main campuses are, the location would be appealing to students and professionals, making a HMO investment seem lucrative.
Licensing – the potential trap
However, the property falls within the HMO additional licensing area in Nottingham. This means that it is unlikely you will get planning permission to convert it, but if it already acts as a HMO and this can be evidenced, you may be on safe ground.
It is worth bearing in mind that the licensing and planning departments are separate within the local authority and have quite separate agendas. What one advises is not necessarily in line with the other.
An investor who is not aware of the licensing in place may see the potential of converting one of the large reception rooms into another bedroom, making it a 5-bed property to maximise their profits.
You may be looking at renting out each of the 5 rooms for around £100 per person per week if you were to let the property out for students. This would achieve £26,000 per annum, achieving a yield greater than 15%.
It is clear why an investor not aware of the article 4 argument, may go into this opportunity blind as it looks like a steal.
Alternative investments
Although the investor could still operate the property as a family dwelling, it would not be as lucrative as a HMO investment. A family let would generate an income of around £9,600 per annum, which is considerably less than you would achieve from a HMO.
There are of course other options you could venture into, such as title splitting, creating two separate titles or talking to people like me who have fingers in many pies and are able to create HMO’s at will.
You can read the blog on title splitting here: https://nottinghamshireproperty.com/2022/01/21/have-you-heard-about-this-investment-strategy/
And look out for upcoming content collaboration with TitleSplit experts!
Useful links:
Check your property’s licensing: https://geoserver.nottinghamcity.gov.uk/myproperty/
YouTube Video Blog:
Is there a way to curb the surge?
The energy price cap is already set to increase by 54%, heavily contributing to the UK’s rising cost of living.
The price cap could soar to more than £3,000 in October as a result of rising wholesale costs and Russia’s invasion of Ukraine.
The energy price cap is the maximum amount a utility company can charge an average customer in the UK per year.
National newspaper, The Guardian, reported on the link between energy prices and the current matters in eastern Europe, headlined “Gas prices hit record high again as Ukraine invasion disrupts markets.”
What does this mean for those paying the bills?
Landlords, homeowners, and tenants across the country have no choice but to foot the bill.
Unless they change the way they manage their energy usage.
House in Multiple Occupation (HMO) properties are often all bills inclusive, meaning it is up to the landlord to pay the utility bills.
The soaring prices will still be an issue even when bills are not included, not for the landlord, but for the tenant who will have to pay them.
How are landlords going to combat the harshened increase for everyone involved?
Here’s what we have done in our HMO properties to aid our landlords during the energy crisis.
We have installed a thermostat that we manage via an app, making the unit hassle-free for the landlord.
Here is an example from one of the HMOs we manage showing the heating used in the last 24 hours.
Previously, the heating in this property was running 24/7, but this graph shows the boiler was on for only 2 of the last 24 hours.
The graph shows the temperature range is 19-19.5°C – we set the temperature remotely, preventing tenant tampering.
It is visible when the ‘boost’ feature is activated and we can view how frequently it is used. The boost feature also gives the tenant an element of control over the heating.
For properties that we manage for other landlords, we manage the situation as part of the management service as every property is different.
Overall, this case study shows that the heating is not on all the time as it had been previously, and more importantly is not on very much at all and is saving the landlord money. This landlord is saving money on over 22 hours of heating a day.
YouTube Video Blog:
Are legionella tests a legal requirement?
Landlords are not legally required to produce a formal certificate in the same way they are expected to have an EICR, EPC or Gas Safety Record.
This is another one of those confusing areas where the law states one thing and yet landlords are required to do another or potentially face prosecution, as they do in fact have a legal duty to assess and control the risk of exposure to legionella. So how on earth do you do that if you can’t produce a certificate showing that it is safe at the time of inspection?
What is legionella?
Legionella is a form of bacteria that causes a pneumonia-type illness called Legionnaires’ disease.
The respiratory infection is a form of pneumonia which, according to The Housing Health and Safety Rating System, has a 10 to 15% of cases proving fatal. The pathogen can grow and reproduce when water temperatures remain between 20°C and 40°C.
The Health and Safety Executive (HSE) states: “Stagnant water favours legionella growth.”
It can be contracted if someone was to breathe in small droplets of water in the air containing the bacteria.
There are a range of symptoms a tenant could be affected by if they were to be infected with the disease:
- High fevers
- Coughing
- Headaches
- Shortness of breath
- Nausea
The risk of legionella is profiled within the ‘water supply’ risk of the House Health and Safety’s list of hazards.
The document suggests that in order to prevent the risk you should take out a visual examination of the installations and fittings within the dwelling for the supply of water, then check the water visually and for odours.
It is usually found within water systems of a property, including water tanks, pipes, showerheads and baths.
Statistics
On average, there are approximately 200-250 reported confirmed cases of Legionnaires’ disease each year in England and Wales and it is thought that the total number of cases may be underestimated. About half of the cases are associated with travel abroad. (Source: HSE)
The data displays an overall decrease in cases of legionnaires’ disease in England and Wales before and during the coronavirus pandemic. The East Midlands alone has seen a lower figure in 2020 than the mean between 2017 and 2019. (Source: HSE)
The decrease could suggest that private rented student properties are skewing the results for the numbers of legionnaires’ disease cases.
Why is this?
Many students returned to family homes to enjoy company and a cheaper living situation amidst the pandemic. Thus, meaning rented properties were left unoccupied. All the more reason for landlords to complete a quality risk assessment.
So, are rented properties to blame for the majority of legionella cases?
Does this mean we need to be stricter on legionella assessments and risks?
Highlighting the figures in Nottingham, the data shows that there were 30 cases of Legionnaires’ disease. In relation to the fatality rate published by the HHSRS, mentioned above, a conservative figure would suggest that 3 of those people with the disease have died of it. Looking at the higher range of the fatality percentage bracket, at least 4.5 of those infected would have died.
The landlords or letting agent would be liable for those deaths within the property they own or manage and would face an unlimited fine decided by a court of law.
Preventive measures for landlords
To reduce the risk of legionella infesting your property you should remove dead ends in your pipe-work, flush out infrequently used outlets (for example if your tenant is away from the property for a prolonged period of time), and advise tenants de-scale showerheads frequently.
The HSE suggests, in order to minimise legionella growth, a landlord should
- keep pipework as short and direct as possible,
- adequately insulate pipes and tanks,
- use materials that do not encourage the growth of legionella,
- fit tanks with lids and insect screens to prevent contamination,
- ensure that vermin are not an issue in the property as they can be a source of contamination example – for example in the water tank.
How to test for legionella
Most landlords can assess the risk of the bacteria themselves, making the compliance inexpensive and straightforward. Legally, landlords do not need to be accredited legionella assessors (in England).
The following need to be assessed by the landlord or legionella assessor:
- Identify potential hazards
- Identify who is at risk
- Examine water temperatures
- Test for limescale
- Test water systems for legionella
- Implement adequate control measures
- Record the findings for review of the assessment
Legionella risk assessments should be reviewed approximately every two years and before a new tenancy begins.
Review the risk assessment
It is not a legal requirement to have a legionella risk assessment reviewed by a professional. However, as mentioned above, Legionnaires’ disease has a 10% to 15% fatality rate meaning a landlord could get into a lot of trouble if something was to go terribly wrong in their property. If a tenant were to contract the disease from the water system in their home, the landlord may be liable to prosecution.
Make sure you have followed procedures correctly!
Summary
Health and safety law does not require landlords to obtain a ‘legionella testing certificate’. They can also complete the assessment themselves. There is clearly very minimal stress required to address the bacteria.
So, the answer to the question:
‘Should a landlord do the bare minimum to protect the occupiers of their rental property?’
In my opinion, the answer is a resounding ‘Yes’. As the presence of legionella can put your tenants at risk of a possibly fatal disease, I would argue that legionella assessments be held in higher regard. But should they require professional treatment?
Useful links:
Fortunately, most tenants behave in a lawful and tenant-like manner. Landlords are eternally grateful for those who do act accordingly.
Unfortunately, for every good tenant, there is a bad one.
There are many illegal exploits a tenant could perform in a rented property that could cost landlords dearly in time, stress, and money if they do not take the correct procedures.
How honest have your tenants been?
Potential illegal activity that could be committed by tenants in rented properties:
Persistent anti-social behaviour
Anti-social behaviour in private rented property is when a tenant causes alarm or distress to other people in their neighbourhood. Although, landlords are not legally responsible for the bad behaviour of their tenants, ignoring the matter could issue other problems that they would want to avoid.
The council may take over the management of a property to put a halt to poor behaviour. Also, it can cause the need for a ‘selective licensing scheme’ if people in the area are behaving anti-socially. Selective Licensing is a scheme that requires most private rented properties to be licensed. It means that houses need to be licensed where they have one or two tenants or a family living there. (Source: Nottingham City Council)
Signs of anti-social behaviour:
- Loud music/shouting
- Fly-tipping
- Hosting parties
- Car engine noise
- Vehicles inappropriately parked
- Abusive and threatening behaviour/Racist and homophobic abuse
- Children astray on the street
Illegal sub-letting
Subletting is when an existing tenant lets all or part of their house to another person, known as a subtenant. However, they need to be granted permission for this arrangement, as it becomes illegal if it is not granted.
Signs of illegal subletting:
- Extra rubbish in the bins every week for the property
- An overcrowded driveway
- Noise complaints from neighbours
Drug farms
Recently, a news story on a landlord who faces a £150,000 bill for repairs after a tenant turned their property into a drug farm, has been reported by mainstream news outlets.
Interference with the electricity meter is a clear sign of a drug farm within your property. If this becomes apparent, your electricity provider will issue a letter requesting a meter reading or to visit the property. They will provide the landlord with guidance to follow.
There are also other signs of drug farming in your property to look out for:
- The smell of cannabis
- The tenant is often absent from the property
- The tenant has concealed parts of the property, for example, the loft
- Large amounts of cash lying about
Brothels
You would think that you would know if there was a brothel being operated from your property. You may however not be alerted if you have a property in a nice residential area and you are offered six months’ rent in advance for a six-month tenancy. At the end of the six months, the property is handed back to you in excellent condition. What you may not be aware of is that it was used as a pop-up brothel.
Modern-Day Slavery
This is a huge issue that we all need to play a part in stopping. If you rent your property and do not do appropriate right to rent checks, tenancy checks, ensure that there is no overcrowding and do regular inspections taking note of additional mattresses, evidence of additional people being there etc, your property may be used for this horrific crime.
Puppy Farms
This is a growing crime and alarmingly often takes place in rental properties. If you have a cellar, do you check it during your inspections? Do you check out the outside space during your property inspections? Is there evidence of puppies/kittens? Is there a bad smell?
Procedures to take:
Don’t fall into the trap where Landlords, on many occasions, blindly praise their tenants as they pay their rent on time and never bother them with repair and maintenance issues.
Those landlords, who fall into this ‘trap’, are always late to discover the problems occurring in their properties, meaning for costly consequences.
As a landlord, it is vital to have a plan of action before and during the occupancy of your property, to protect yourself.
Perform background checks on your potential tenants.
- Obtain references from the tenant’s previous landlords.
- Ask for and consider the tenant’s employment history/status.
- Meet the tenant face to face – this may be difficult due to COVID
- Check their Right to Rent status
- If the applicant has lied or misled you at this stage, do you really want them as a tenant?
Insure the property to protect yourself against costs of potential damage.
Insist upon the tenant having a solid backup plan should they not be able to pay their rent or damage the property. This could be in the form of a viable guarantor to ensure costs for a potential breach of contract are covered. However, it is important that you do not discriminate against those who do not have one as it is not a legal requirement to attain one. An alternative might be to suggest a rent guarantee scheme – which is at the tenant’s expense.
It would also be beneficial to perform regular inspections to monitor the property. You are able to make a provision in the tenancy for periodic checks. A written notice of 24 hours is the minimum requirement to inform your tenants of upcoming inspections. Afterall, you do not want to be disturbing the tenants’ right to peaceful enjoyment of their home.
There is a saying that I particularly like and have personally tried to stick to – do not mix business with pleasure. Many landlords come to me with issues with their tenancies, and it transpires that the tenant is a friend of the landlord. They have skipped vital steps when managing their tenancy and the initial tenancy checks.
If you choose to rent your property to a friend, I would urge that you either employ an agent to manage the property or at the very least keep the arrangement separate from your friendship.
How to evict a tenant
A tenant needs to be evicted if they are committing illegal activity in the landlord’s property.
A landlord can evict a tenant by issuing a section 21 or section 8 notice.
It is hugely important to use the correct notice and to ensure that you are compliant.
Make certain that all of your paperwork and the property meets the legal requirements, or your notice may not be valid.
However, section 21 is set to be abolished and you can read the blog on that matter here: https://nottinghamshireproperty.com/2022/01/26/the-upcoming-abolishment-of-the-no-fault-section-21-could-be-costly-for-landlords/
Summary
Regular arranged procedures of monitorisation are a pivotal measure to undertake in order to limit the risk of criminal activity. Arranging inspections will comfort and maintain rapport with the tenant subtly, keeping their tenancy compliant and in order. Taking the correct procedures will protect the landlord and the property, possibly saving thousands in the process.
Do not judge a book by its cover, be investigative.
This week I am going to share my pearls of wisdom around the importance of catchment areas when thinking of investing in a property.
Background
Not many children have the luxury of a ‘silver spoon’ upbringing and cannot rely on wealth to provide them with the best education possible. Those children must rely on the quality of the education on offer.
However, just because you live near a school, it does not mean you are guaranteed to be within its catchment area as they can change and are bemusing. They may not even have a catchment area.
Carlton Le Willows is a great example of this. Rated ‘good’ by Ofsted, the school in Gedling, Nottingham could be the first choice for parents when looking for a school for their children. Emotions run high around offer day for children and parents alike. So much is at stake and getting your child into their/your chosen school becomes all consuming.
As there are a finite number of places every year, the admission criteria is crucial and often overlooked by parents.
So why is this relevant to investors?
The catchment area appears as the second ‘priority’ on the school’s admission policy and appears prominently throughout the rest of the list.
Carlton-le-Willows Academy is located on Wood Lane, Gedling, Nottingham, NG4 4AA.
So, let’s have a look at the school’s catchment.
Catchment area
The catchment area for the school is controversial, with properties under half a mile falling outside, with addresses in the likes of Colwick, 2.5 miles away from the school falling within the catchment area.
Confusing right?
Therefore, someone may make the mistake of buying a house close to the school thinking the property is guaranteed to be within the catchment area when in fact, it is not. Thus, making it worth less than one that is in the catchment.
Example properties
A 3-bedroom semi-detached property for sale on Station Avenue, Gedling, Nottingham is priced at £260,000 on Right Move. Despite being just 0.4 miles away from Carlton-le-Willows, it does not fall within the catchment area for the school, and interestingly has recently been reduced in price. I would therefore personally not invest in this property. Unless it was an absolute steal of course.
A family may look at purchasing this house with their children’s education in mind, as it is a short walk to a ‘good’ school, without knowing the complicated catchment area argument. Another 3-bedroom semi-detached house property that is also in the Gedling area is priced at £290,000 on Right Move. Someone could dismiss this property when searching for a house close to a school, as it is more expensive and further away than the previous property mentioned above. It is located on Stoke Lane which is 1.1 miles away from the secondary school and the plot currently falls within the catchment area for Carlton-le-Willows.
In my view, would potentially be a better investment than the one outside of the catchment of the school.
Potential benefits of locality
The area is close to Colwick loop road, providing a route to shopping in Netherfield (Victoria retail park) 1.1 miles away and just over 1 mile (1.3 miles) from shopping in Carlton Square.
It is also just over 5 miles from Nottingham City centre, that can be accessed by the use of bus routes, 24, 25, 26 and 44.
Published Admission Number (PAN)
The proposed published admission number of Year 7 in September 2022/23 is 240 for Carlton Le Willows.
| Year | Applications | Allocated | Refused |
| 2021-22 | 610 | 300 | 49 |
| 2020-21 | 655 | 300 | 86 |
| 2019-20 | 643 | 300 | 78 |
Deadlines
All applications for places in the normal year of entry are made on the common application form through the home local authority. For entrance to the academy in September 2022, the closing date of the co-ordinated admission scheme is 31 October preceding admission to secondary school. Places are allocated on 1 March 2022. This means that parents are up against a large number of other parents to secure one of those coveted places. Hitting one of the top admissions criteria, namely ‘catchment’ suddenly becomes a big if not huge deal.
Opportunity
Agents assess the market value of a property by looking at the comparable properties in the area (FACT). They should also use a few other indicators too, but I would put money on the fact that school admissions criteria will not be at the top of any of their lists.
As an independent appeals panel chair of over 12 years, I can confirm that people are buying houses or renting and then finding that their house is not in the catchment for their chosen school when the next-door neighbours’ house is.
Yet the houses were advertised as being worth the same by the selling agent. I would argue, as an investor, that they are not.
The house in the catchment is potentially worth more, and for the right buyer/renter, much more, parents will pay a premium to get their child into their chosen school. One could argue the ethics around this approach – and yes, there are many views to consider here, but I’m simply sharing my investment views on the subject. Nothing more.
I would strongly look at the schools that rated ‘outstanding’ or ‘good’ and hunt down those properties that in my opinion are being sold for less than what their true potential is and focus on those.
Word of warning
Ensure that you fully understand the admissions criteria for the school –you will need to keep up to date as the admissions policies do change.
Rent
If you were looking at a buy-to-let deal you would be looking at renting a 3-bed semi-detached property in the catchment area for £850-£950pcm.
YouTube Video Blog:
Failing to follow the law protecting tenants’ deposits can be costly for landlords, with the potential of paying up to three times the amount deposited. But it’s not just the landlords who are having their profits desecrated for tripping up, the big boys are also in the spotlight.
This has been displayed recently, as Purplebricks have been forced to pay out around £9 million. It has been reported that the lettings business of the online estate agency did not follow the deposit protection procedures correctly. (Source: The Guardian)
Deposit protection schemes were brought in to prevent dishonest landlords from holding deposits, which can be worth more than a month’s rent, but cannot be more than 5 weeks’ rent.
Tenancy Deposit Protection scheme – the rules
As a landlord, you must place your tenants’ deposit in a deposit protection scheme if you rent out your property on an assured shorthold tenancy (after 6th April 2007).
It must be placed within a deposit protection scheme within 30 days of receiving it.
You must use one of only three government-supported schemes if your property is in England or Wales:
- Deposit Protection Service
- MyDeposits
- Tenancy Deposit Scheme
These all offer to hold the deposit for free, known as a ‘custodial’ scheme’ or you can hold the deposit and pay the scheme to insure it, known as an ‘insured’ scheme.
The tenant is entitled to their deposit within 10 days of agreeing on the amount that will be returned.
Tenants must receive their deposit back if they:
- Meet the terms of their tenancy agreement
- Do not damage the property
- Pay their rent and bills
A deposit offers a landlord a sense of security and means that should the tenant breach the terms mentioned above, an appropriate deduction can be taken from the deposit.
However, holding deposits from future tenants do not have to be protected. Once they become tenants the holding deposit becomes a deposit, which must be protected.
Consequences of failing to follow suit
If you do not protect your tenants’ deposit, you could be ordered to repay the tenant up to 3 times their initial deposit. Deposits are usually equivalent to the price of a month’s rent, which is not cheap by any means. Citizens Advice suggests a tenancy deposit will usually be the same amount as 4- or 5-weeks’ rent.
For example, if a landlord is renting out a property at £800 per calendar month and fails to comply with a tenancy deposit scheme, they could be charged up to £2400.
The estate agent, Purplebricks, has been in the news recently for failing to protect deposits and the repercussions they are faced with are costly.
It has been reported they will set aside millions to cover the blunder by their letting’s business.
The court may also decide that your tenants do not have to leave the property when the tenancy ends. This is clearly not a good situation for any landlord.
There is also a list of items of information a tenant must be provided with, within 30 days of a landlord receiving the deposit:
- The address of the rented property
- How much deposit they have paid
- How the deposit has been protected
- The name and contact details of the deposit protection scheme and its dispute resolution service
- The landlord or letting agency’s name and contact details
- The name and contact details of any third party who paid the deposit
- Reasons why some or all of the deposit may not be returned to the tenant
- How to apply to receive the deposit back at the end of the tenancy
- How to overcome communication issues between the landlord and the tenant at the end of the tenancy
- What to do if there’s a dispute over the amount of deposit to be returned at the end of the tenancy (Source: GOV.UK)
Deposits for pets?
Landlords in England cannot request a higher deposit for renting with a pet or professional cleaning service at the end of the tenancy. However, a landlord can charge extra rent for a pet in their property.
Disputes
The tenancy deposit protection scheme has a free dispute resolution service if the landlord and tenant disagree about how much of the deposit should be returned.
Useful links
GOV.UK – Deposit protection schemes and landlords: https://www.gov.uk/deposit-protection-schemes-and-landlords
Just what we need.
With the government’s commitment to abolishing ‘no-fault’ evictions in the private rented sector, the debate is certainly heating up. Is this really a good idea? On the face of it you might vote a resounding ‘Yes’, but long term I’m personally not so convinced.
A White Paper for section 21 is expected this year.
In April 2019, the government announced: “Private landlords will no longer be able to evict tenants from their homes at short notice and without good reason.” Exactly, the point that there has to be a good reason is a valid one. However, many landlords are concerned that we are already in a position whereby the law makes it extremely difficult, costly and time-consuming for landlords even when there is a good reason to evict.
As Section 21 enables private landlords to repossess their properties without having to establish fault on the part of the tenant, tenants are not therefore unduly discriminated against when trying to secure another rental. The problem is the section 21 notice has been used indiscriminately when a fault notice was the required method of eviction. So could we then argue, it’s the landlords’ fault for not using the correct notices in the first place? Interesting point.
This has caused several issues for the tenant and ultimately landlords, as those tenants being evicted via a no-fault notice incorrectly, are moving on to an unassuming landlord further down the line. Often causing the same issues in the new tenancy. I can totally see why a landlord would go down this route if they do not want the hassle of proving fault on behalf of the tenant, or possibly feel unable to prove it. My view is steadfastly if a tenant is at fault, it should be documented and create a warning for future landlords. I also feel that being held to account is the only way we are going to see a shift in the behaviour of tenants who cause serious issues within their tenancy. There are two sides to every story, and it is not always the landlord’s fault!
A problem for landlords
Effectively, the abolishment of the notice will dramatically affect the ability of a landlord to regain possession of their property.
Although a section 8 notice also allows a landlord to evict a tenant, a landlord will need a valid reason. This notice can be issued if the tenant has:
- rent arrears (the most common cause)
- damaged the landlord’s property
- committed anti-social behaviour
However, a section 8 eviction notice can be challenged by the tenant, which could potentially lead to a court hearing. The eviction can be challenged if the notice is not valid or the tenant has a good reason why they should not have to leave the property. The Ministry of Justice reported in 2017 that it takes an average of 22 weeks for a landlord to repossess a property through the courts. A court visit could be costly for a landlord. However, issuing section 21 can seek to regain the property as early as two months. Once again, I can see why landlords would choose this option regardless for the reason of eviction.
I have seen good landlords having to defend their case against an unscrupulous tenant and the court system appearing to be weighted in the tenant’s favour. What makes this worse for me to stomach, is those very tenants who have received free legal representation to boot. Which the taxpaying landlord has indirectly also paid for. Surely this cannot be justice?
Agreed, those tenants who have done nothing wrong and behaved in an appropriate tenant like manner should be suitably protected, and by the same rules, so should the good landlords.
Interestingly, poor tenant behaviour was the most common reason for a section 21 notice, which does not require a court hearing and can be carried out on paper.
A win or loss for tenants?
It is evident that tenant organisations support the abolition of no-fault evictions. Shelter described the Government’s announcement as “an outstanding victory”.
This is because the abolition will mean there will be fewer unwanted moves caused by evictions and tenants will have more confidence to complain about mistreatment. Will landlords have the same confidence?
However, a report by the NRLA, ‘Possession Reform in the Private Rented Sector: Ensuring Landlord Confidence’, suggests tenants will be worse off. The report states the removal of section 21 would make 84% of landlords likely to become more selective in their choice of tenants. Therefore, it would impact low-income, vulnerable tenants, leaving them without homes. I personally feel that this will be the case, from what I am hearing from landlords. So is this really an ‘outstanding victory’?
An increased selectivity has already been visible in the recent COVID-19 pandemic, with landlords insisting on a solid plan B from prospective tenants for example only accepting those with UK Home Owner Guarantor. This gives landlords themselves a sense of security, as the pandemic caused mass unemployment, resulting in tenants being unable to pay their rent.
Furthermore, the NRLA warned of “serious dangers” to the supply of rented housing for vulnerable tenants.
Difference between section 8 and section 21 eviction
A section 8 notice is served when a tenant is in breach of contract, whereas section 21 is issued to end a tenancy agreement to allow the landlord to regain possession of their property.
How will this change the private renting sector?
Overall, increased security for tenants will cause landlords to become more selective with the occupants of their properties. I am already seeing an increased selectivity and indirect discrimination against vulnerable people even before section 21 has been abolished and this is due to the harsh impact of the coronavirus. This could become problematic for the private renting sector. Whilst the abolition aims to cut down the homelessness figure in the UK, it will force objecting landlords to become more aware of their own security and deny desperate seekers the chance of a home.
- Increased security for tenants;
- However, landlords will become more selective
In conclusion, it is my view that the abolition of the Section 21 Notice alone, will be counterproductive. I feel that this would only have a positive outcome if landlords received support in dealing with ‘problem tenants’ instead of being branded the ‘bad guys’ as is often the case.